In the past decades, behavioral economics has credibly identified numerous decision-making biases leading people to make choices they would not have made if better informed about the long-term consequences of their actions. This has given rise to a new reason for government interventions: internalities. In contrast to traditional reasons for government intervention, such as redistribution and externalities, overcoming internalities often involves the use of paternalistic policies. We investigate theoretically and empirically the formation of attitudes toward paternalistic policies. Theoretically, we focus on the role of self-interest and distinguish between self-interest as construed for the rational decision-maker, self-interest when self-control problems are present, and self-interest when procedural or expressive elements, such as autonomy, matter. Empirically, we employ two novel data sets: a Danish survey on political opinion combined with administrative data on actual behavior and a large-scale cross-country survey to analyze attitudes toward paternalistic policies in the health and financial domains. We show that targets of paternalism are more opposed to paternalism than non-targets both in Denmark and across nine Western democracies and rely on our theoretical priors to explore mechanisms that can explain these attitudes.

With respect to the views of dead thinkers, answers to many particular questions are often interpretive in Ronald Dworkin's sense. Such answers must attempt (1) to fit the materials to be interpreted and (2) to justify them, that is, to put them in the best constructive light. What looks like (1), or what purports to be (1), is often (2). That is, when a follower of Kant urges that ‘Kant would say x’, or that ‘Kantianism entails y’, the goal is to make the best constructive sense of Kant and Kantianism, not merely to adhere to something that Kant actually said. An approach to behavioral economics cannot claim to be Hayekian if it is rooted in enthusiasm for the abilities of planners to set prices and quantities, or if it sees the price system as a jumble of mistakes and errors. But within a not-so-narrow range, a variety of freedom-preserving approaches, alert to the epistemic limits of planners, can fairly claim to be Hayekian. Hayekian behavioral economics, I suggest, is an approach that (1) recognizes the importance and pervasiveness of individual errors, (2) emphasizes the epistemic limits of planners, (3) builds on individual choices rather than planner preferences, and (4) gives authority to choices made under epistemically favorable conditions, in which informational deficits and behavioral biases are least likely to be at work. The key step, of course, is (4). If it is properly elaborated, the resulting approach deserves respect. It is worthy of serious consideration, even if some of us, including the present author, would not entirely embrace it. In defending that proposition, the present essay responds to some critical remarks on behaviorally informed policy, including the resort to ‘explainawaytions’ (Matthew Rabin's term) for behavioral findings.

One of Friedrich Hayek's most important arguments pointed to the epistemic advantages of the price system, regarded as an institution. As Hayek showed, the price system incorporates the information held by numerous, dispersed people. Like John Stuart Mill, Hayek also offered an epistemic argument on behalf of freedom of choice. A contemporary challenge to that epistemic argument comes from behavioral economics, which has uncovered an assortment of reasons why choosers err, and also pointed to possible distortions in the price system. But, even if those findings are accepted, what should public institutions do? How should they proceed? A neo-Hayekian approach would seek to reduce the knowledge problem by asking what individual choosers actually do under epistemically favorable conditions. In practice, that question can be disciplined by asking five subsidiary questions: (1) What do consistent choosers, unaffected by self-evidently irrelevant factors, end up choosing? (2) What do informed choosers choose? (3) What do active choosers choose? (4) When people are free of behavioral biases, including (say) present bias or unrealistic optimism, what do they choose? (5) What do people choose when their viewscreen is broad, and they do not suffer from limited attention? These questions are illustrated with reference to the intense controversy over fuel economy standards.